Contract of Bailment

This article is written by Harshit Khandelwal, 2^nd year Law student currently pursuing BBA-LL.B(Hons.) from Unitedworld School of Law, Karnavati University. In this article, the author discusses the concept of Law of Bailment, duties and rights of bailor and bailee.

INTRODUCTION

The term bailment can be understood as the transfer of goods by one person to another for some motive and when it is accomplished the goods are returned back to its actual owner. For example, Z delivering his bike for service at the service centre is an instance of bailment. The person delivering the goods is known as bailor and the person to whom goods are delivered is known as bailee. Still, if the owner continues to maintain authority over the goods, there is no bailment.

For e.g., If Z gives his car to A, his friend for 12 days, but at the same time he keeps one key with himself and during this period of 12 days he used the car for his personal purpose. Now this will not be considered as a case of bailment as A is keeping control over the property bailed.

Duties of a Bailee

1. Taking Proper Care of Goods

According to section 151 of the Indian Contract Act, 1872, says that it is the duty of the bailee to take good care of the goods bailed to him. The good should be taken care of by bailee as an ordinary man will be taking care of his goods of the same quantity and quality.

If the bailee takes good care of the goods then he will not be liable for any loss. However, the bailee will not be liable for any loss that occurred due to Act of God though he agrees to take special care for them.

2. Keep Goods Separate

The bailee needs to put the goods separately from his own goods. He should not mix his goods with the goods under bailment.

3. Not to make unauthorized use

As per section 153 of the Indian Contract Act, the bailee is not authorized to use the bailed goods. The bailor can terminate the bailment if the bailee makes any unauthorized use of the goods.

4. Return Goods

The goods shall return to the bailor once the motive for bailment is completed.

For e.g., Z leaves a dog in the custody of A. The dog gets a puppy. A shall deliver the dog along with the puppy to Z.

Bailee’s Rights

Right to Lien

Lien is primarily a right of one individual to keep back the property/goods which are in his possession, owned by another individual until certain conditions are fulfilled.

For e.g., If Z gives his watch for repairing to a shopkeeper. The shopkeeper is entitled to keep the watch with him until Z pays him for the cost of repairing.

For exercising lien some factors are need to be considered –

1. Some services must be provided to the bailor by bailee involving skill and labour.

2. The services must meet the criteria of the bailment .

3. The services must be concerning to the thing bailed .

General Lien

A general lien is explained in section 171 of the Indian Contract Act. It is right to retain the goods of another for the balance of accounts. It authorizes a person to retain the goods with him until all the claims of the person in possession against the owner of goods are settled.

Duties of a Bailor

1. Disclosure of each and every fault is the duty of the bailor. If bailor fails to disclose any such faults then he will be responsible for the damages caused to his/her goods.

2. It is the duty of the bailor to accept the goods once the motive for which goods were bailed is completed.

3. The bailor is also under the obligation to pay the extraordinary expenses suffered by the bailee for such bailment .

Essentials of Bailment

1. The Existence of a Valid Contract

The foremost condition of bailment is the existence of a valid contract which states that goods are to be returned when the motive of bailment is fulfilled. All conditions need to be fulfilled for a valid contract like a lawful object, free consent and competent parties.

2. Delivery of the Possession of Goods

The concept of bailment goes around the fact that goods are delivered to the bailee for a temporary period, and the bailee cannot have its a permanent possession.

3. Return of Goods

In the process of bailment, goods are delivered to the bailee for a specific purpose and after successful completion of the purpose, the bailee should return the goods to the bailor in the same condition as directed by the bailor. If the goods are not returned back by the bailee to the bailor, then it will not be considered as a bailment.

Types of Bailment

There are three types of bailment –

1. A bailment that only benefits the bailor

When a bailee acts gratuitously that gives the bailor sole benefit from the bailment.

For e.g., If a hotel(bailee) provides complimentary drinks which is free of charge to its customers(bailor). By uprightness of the conditions of the bailment, the bailee consented to act without any expectation from the bailor.

2. A Bailment that only Benefits the Bailee

When both parties agree that bailee can use the property for his/her own advantage without giving anything in return to the bailor is said to be the sole benefit of the bailee in the bailment.

For e.g., When a student issues a book from the library which is for the sole benefit of the bailee in the bailment.

3. A Bailment that Benefits both the Bailer and Bailee

An exchange of performance between both the parties creates a mutual benefit for both the bailor and bailee in the bailment.

For e.g., A bailment for repairing of a mobile phone where there will be a mutual benefit as the bailee receives his fees for the work done of the bailor.

CONCLUSION

After examining the provisions of bailment in brief we have seen that the concept of bailment includes handing over the goods to the bailee for a specified purpose and returning it back to the original owner once the motive is completed. Rights and duties of bailor and bailee are briefly defined for the easy understanding of the basic concepts of bailment.

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